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John Alan Cohan, Contributing Columnist

Livestock Industry Opinions
Jun 10, 2016
In a remarkable decision, the Seventh Circuit Court of Appeals reversed a Tax Court opinion dealing with a Thoroughbred racehorse owner’s activities. This case is important to the livestock industry because IRS hobby loss regulations, the subject of the opinion, apply to livestock as well as horse activities.
Livestock Industry Opinions
Jan 22, 2016
For most people, their encounter with the IRS ends at the audit phase: Taxpayers will often agree to pay whatever the IRS says they owe. In situations where the auditor claims your ranch or farming activity is a hobby, not a business, this can have long-lasting and adverse consequences because deductions against outside income would be disallowed.



Livestock Industry Opinions
Nov 8, 2013
They just broke 2 pounds a day of average daily gain on grass and are heading to the feedlot at 940 pounds. The center had 102 yearling heifers last spring. After selecting 25 replacement heifers, 77 were spayed and sent to grass. Of the 25 replacement heifers, 19 were diagnosed as pregnant.
Livestock Industry Opinions
May 10, 2013
For many people in the horse or livestock business, the operations have a history of losses, but the expectation is that future operations will be profitable. The IRS will want to see evidence that the taxpayer has taken steps to correct or abandon unprofitable strategies, and to demonstrates steps taken to improve operations.
Livestock Industry Opinions
Mar 8, 2013
Some cases involve a combination of activities, such as Smith v. Commissioner, T.C. Memo 2007-368. This involved a cow and dairy farm, a cutting horse operation, and dog breeding. The court held that the cow and dairy farm was engaged in forprofit activities under the IRS hobby loss rules, but not the other activities.
Livestock Industry Opinions
Sep 7, 2012
Section 183 of the IRS Code pertains to activities “not engaged in for profit.” This provision is used to disallow deductions for all farming-ranching activities as well as other ventures ranging from multi-level marketing to air charters. How this provision is applied and interpreted is something that the IRS commissioner can and does influence.
Livestock Industry Opinions
Mar 23, 2012
Sometimes a farm, livestock or horse activity may be closely connected to one’s principal occupation, with certain tax advantages. If two activities are treated as one, deductions and income from each activity can be aggregated in deciding whether the taxpayer has the requisite profit motive under the IRS hobby loss rule.
Cattle and Beef Industry News
Dec 16, 2011
Wheat is an amazing crop…which is why we grow it in Oklahoma. Given the slightest opportunity, wheat responds very well under adverse conditions. In late October, the prospects for wheat pasture seemed all but lost with most wheat planted late and dry. It was noted, however, that with timely rains, a decent wheat crop could still develop.
Livestock Industry Opinions
Nov 5, 2010
After about 30 years handling tax audits, appeals and U.S. Tax Court cases, it seems to me that the IRS is taking a more aggressive approach against people in various industriesincluding livestock and horse activities. If you are audited by the IRS and you have a history of losses with little or no profits, the following advice pertains to you.
Livestock Industry Opinions
Mar 26, 2010
The accuracy and businesslike nature of records is something that the IRS has been scrutinizing more and more in recent years. The IRS expects all taxpayers to maintain canceled checks, invoices, credit card statements and similar items needed to substantiate amounts claimed as business deductions and to help prepare ones tax returns.
Livestock Industry Opinions
Feb 5, 2010
The American wind power industry grew substantially in 2009 and at this point, almost 2 percent of the countrys electricity is produced from wind turbines. Many of these turbines are on farm and ranch properties all over the country. I have received many inquiries from people who have been approached by wind turbine developers.
Livestock Industry Opinions
Aug 21, 2009
Most of tax law is in grey areas. For instance, reasonable people, including those within the IRS bureaucracy, will disagree on what constitutes an ordinary and necessary business expensea big area of tax deductions. Another area concerns whether litigation proceeds to compensate for damages to farm or ranch property constitute taxable income.
Livestock Industry Opinions
Jun 12, 2009
In a lengthy decision, the Tax Court recently underscored the difficulties taxpayers have in convincing the IRS that family-run farms are engaged in for profit. The case, Smith v. Commissioner, T.C. Memo 2007-368, ruled on two families limited partnerships, involving a cow and dairy farm, a cutting horse operation, and dog breeding.
Mar 6, 2009
The farming, livestock and horse industries are facing challenges in hard economic times. These industries serve the economic lifeblood of millions of Americans, not only owners, but related industries and services as well. Casualties and setbacks from economic forces are recurring problems making it difficult to make a profit on a consistent basis.
Feb 20, 2009
The IRS is focusing more on audits in the farming, livestock and horse industries in which taxpayers are claiming six figures or more in tax deductions. This often pertains to taxpayers who are employed full time in a profession and operate the farm or other activity on a parttime basis, often relying on managers and contract employees.


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